Bovespa Index Rises From Nine-Month Low on Interest-Rate Outlook
The Bovespa index advanced from a nine-month low after Brazilian policy makers raised borrowing costs less than some analysts had forecast, spurring speculation that monetary tightening will be limited.
Retailer Cia. Brasileira de Distribuicao Grupo Pao de Acucar led gains by companies that sell locally. Petroleo Brasileiro SA (PETR4) contributed the most to the advance as crude rebounded. Vale SA (VALE5) slumped after its iron-ore production missed analysts’ estimates for the first time in four quarters.
The Bovespa added 0.5 percent to 53,153.50 at 1:41 p.m. in Sao Paulo after reversing a decline of as much as 0.9 percent. The real weakened 0.8 percent to 2.0166 per dollar.
Policy makers raised the target lending rate for the first time since July 2011, seeking to slow inflation levels jeopardizing the economic recovery. The central bank’s board voted 6 to 2 to increase the Selic rate 25 basis points to 7.50 percent from a record low. Eighteen of 58 economists surveyed by Bloomberg forecast an increase of 50 basis points.
“The market was waiting for a 25 basis point increase, but there was some concern the central bank could be more aggressive,” Lucas Brendler, who helps manage 5 billion reais at Geracao Futuro, said by phone from Porto Alegre, Brazil. “The fact that two board members voted to keep the rate unchanged fuels expectations that the current cycle of increase might be smoother.”
Pao de Acucar rallied 3.7 percent to 108.17 reais. Petrobras, as Petroleo Brasileiro is known, rose 2.4 percent to 17.58 reais. Vale fell 0.5 percent to 30.83 reais.
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